Speakers

Will Barrow
Senior Associate at Ashurst
Anandhi Vivek Dhukaram
Chief Responsible AI Officer at Esdha

For Business

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EU AI Act Readiness: Meeting Your Organization's AI Literacy Requirements

August 2024

Summary

The EU AI Act is a first-of-its-kind comprehensive regulation of artificial intelligence, designed to govern every stage of AI systems from creation to implementation within the European Union. This legislation requires businesses to ensure their employees understand AI, emphasizing the need for organizations to ensure AI literacy and governance. The Act classifies AI systems based on risk categories, from minimal to unacceptable, each with specific compliance requirements. Non-adherence could result in substantial fines, up to 7% of annual turnover, along with reputational harm. The Act's scope goes beyond businesses within the EU and extends globally to any company whose AI systems impact the EU market, similar to the GDPR. Companies are advised to include AI compliance from the beginning of their AI projects, ensuring that all levels of their organization understand AI's role and potential risks. This involves a tiered approach to training, focusing on different needs depending on employee roles, from management to developers. The Act aims to mitigate risks and also enable businesses to effectively use AI for innovation and productivity, encouraging a practical approach to adherence.

Key Takeaways:

The EU AI Act requires AI understanding for both AI providers and deployers.
A risk-based classification system determines the compliance requirements for AI systems.
Non-adherence to the Act can result in severe fines and reputational harm.
The Act's scope is global, impacting businesses outside the EU if their AI systems affect the EU market.
An inclusive approach to AI literacy and compliance can maximize business benefits and mitigate risks.

Deep Dives

EU AI Act and Its Global Impact

The EU AI Act repres ...
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ents a significant moment in AI regulation, being the first comprehensive legal structure for AI systems. It applies not only within the EU but also impacts global businesses whose AI systems affect the European market. This global reach is similar to the GDPR, meaning that any company, regardless of its location, must adhere if its AI technologies influence EU customers or operations. "The Act's global impact is unprecedented," stated William Barrow, emphasizing that businesses must be proactive in understanding these obligations. This broad application aims to ensure that AI is developed and used in a manner that is safe, trustworthy, and human-centric, while also promoting the EU as a hub for AI innovation.

Risk-Based Classification of AI Systems

The Act categorizes AI systems into four risk levels: minimal, limited, high, and unacceptable. Minimal risk systems, such as email spam filters, face no regulations, while high-risk systems, like biometric identification and recruitment tools, face strict compliance requirements. Unacceptable risk systems, such as those used for social scoring or behavioral manipulation, are banned outright. "Understanding these categories is vital for adherence," noted Anandi Vivek Dukkaram, highlighting the importance for businesses to evaluate the risk classification of their AI systems to avoid severe penalties. This classification system is designed to protect users and ensure AI systems do not undermine human rights or safety.

AI Literacy and Training Requirements

Article 4 of the EU AI Act mandates AI understanding for all employees who interact with AI systems. This understanding is vital for both providers and deployers of AI, ensuring a comprehensive understanding of AI technologies and their implications. Training needs vary based on roles; management requires a high-level understanding, while developers need in-depth technical knowledge. Anandi Vivek Dukkaram highlighted, "AI understanding isn't only compliance; it's ensuring effective use of AI within organizations." This training helps prevent misuse and ensures employees understand legal and ethical obligations, aiding in the responsible implementation of AI systems.

Adherence and Penalties

Non-adherence to the EU AI Act can result in penalties as high as 7% of a company's annual turnover. These fines are designed to be a deterrent, ensuring companies take their compliance obligations seriously. The Act also imposes reputational risks, as companies may suffer brand harm from non-adherence incidents. William Barrow emphasized, "The reputational impact of non-adherence can drive customers away." Companies are advised to implement adherence measures early in their AI projects, including AI literacy and governance from the start to avoid these severe consequences. Adherence is not only about avoiding penalties but also about encouraging innovation and trust in AI technologies.